Is India An Economic Superpower In the Making?

Doug Bandow
, ContributorI write about international politics, economics, and development.Opinions expressed by Forbes Contributors are their own.

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NEW DELHI, INDIA—On the shambolic streets of New Delhi a new power is rising. India remains poor, but enjoys rapid economic growth rates and now possesses the world's fourth largest economy. If New Delhi politicians free their entrepreneurial people, India may join China as a coming superpower.

Globalization has been an extraordinary force for good. China and India are its greatest success stories.

After the death of Mao Zedong the Chinese government adopted far-reaching market-oriented reforms and is now booming economically. However, the so-called People's Republic of China is not yet free: The Communist Party resists political democratization and continues to interfere in economic matters. Indeed, China faces economic distortion, social instability, and political uncertainty.

There are tens of thousands of demonstrations every year, most directed against corrupt and incompetent local governments. Calls for a "jasmine revolution" modeled on the protests sweeping the Middle East caused the Chinese government to tighten Internet controls and deploy security forces. Moreover, Beijing's increasingly assertive, even brusque, international behavior has antagonized neighboring states. There is widespread fear of possible confrontation and even conflict between the American superpower and the developing Chinese superpower.

India is the most important potential counterweight to China. A former British colony, India was birthed amid violence and chaos after World War II. India possesses the world's second largest population after that of China, and is likely to overtake the PRC, which has disabled itself demographically with the "one child" policy.

New Delhi has another potentially significant advantage over China: democracy. Politics in India is always chaotic and sometimes violent. Nevertheless, the Indian people have an important social release—they can toss out their rulers. Armed resistance is not the only path to political change.

Finally, India has joined China on the economic reform road. Two decades ago the current prime minister, Manmohan Singh, presided over an economic U-turn as finance minister. Observed Indian journalist Niranjan Rajadhyaksha: "The dramatic liberalization of that year and further policy changes by governments in the late 1990s were a smashing success in some ways—India has a far more stable economy and is far more prosperous than before."

This has helped reduce immiserating poverty. Notes Rajadhyaksha: "Average dollar incomes have more than tripled since 1991. Diets have improved and more proteins are being consumed. School enrollment has soared. Human development indicators increased more in the first decade of the current century than they did in the 1990s."

However, much more remains to be done. Intervening governments have been less committed to reform. Even Prime Minister Singh, who labors in the shadow of Congress Party head Sonia Gandhi, has continued New Delhi's debilitating populist policies.